TAIPEI — Fairchild Semiconductor International Inc. has received a revised takeover offer from a group representing China Resources Microelectronics (CR Micro), according to press reports.
The Party G Group, on behalf of CR Micro, has made a bid including new terms on termination fees in the event that the deal fails to win regulatory approval, according to Reuters.
Fairchild said in a statement that it has acknowledged receipt of a revised, unsolicited proposal to acquire all of the outstanding shares of common stock of Fairchild for $21.70 per share in cash.
While the company said its board of directors will carefully review and consider the new proposal, Fairchild said it remains subject to the agreement with ON Semi and Fairchild’s board of directors continues to support the agreement with ON.
The latest offer marks an escalation in a bidding war between ON Semiconductor Corp. and state-owned China Resources Holdings to acquire Fairchild. On November 18, Fairchild entered an agreement with ON Semi under which a wholly owned subsidiary of ON would acquire all of the outstanding shares of Fairchild common stock for $20.00 per share in cash, less than the $21.70 per share offer from CR Micro.
China Resources Microelectronics, a unit of China Resources Holdings, is a Chinese analog chipmaker with headquarters in China’s east coast city of Wuxi in Jiangsu Province, near Shanghai. CR Micro’s main businesses include Wuxi China Resources Semico Co.., one of China’s top-ten chip designers; CSMC Technologies Corporation, a six-inch fab; Wuxi China Resources Micro-Assemb Tech., a test-and-assembly operation; and Wuxi China Resources Huajing Microelectronics Co., a discrete device maker.
China’s chip ambitions
The latest bid underscores the interest of China’s state-backed firms in boosting the domestic chip industry. Earlier this year, a separate consortium of Chinese firms acquired Integrated Silicon Solutions Inc. after a bidding war with Cypress Semiconductor Corp.
According to Bloomberg, the Chinese government has told local companies and the Chinese news media that it intends to spend more than $150 billion over 10 years to develop semiconductors.
In dollar terms, China imports more semiconductors than it does petroleum in order to assemble electronic gadgets such as Apple iPads and iPhones, mostly for export to the rest of the world.
The latest unsolicited bid for Fairchild comes amid a record-breaking year for mergers and acquisitions in the semiconductor industry. The total value of chip industry acquisitions announced in 2015 stands at just over $102 billion, according to market research firm IC Insights Inc.
Fairchild said Party G would now pay it a $200 million reverse breakup fee in case of failure to obtain the required regulatory approvals, $20 million more than ON Semiconductors' termination fee.
Fairchild said failure to get clearance from the Committee on Foreign Investment in the United States would trigger the payment of a $108 million reverse termination fee by Party G.
The company said Party G's latest offer includes a $215 million reverse termination fee and committed financing from banks.
Fairchild also said Party G would pay Fairchild's $72 million breakup fee owed to ON Semiconductor and reduce the due diligence period to two weeks from three weeks.